Dobbs Corporation is considering purchasing a new delivery truck. The truck has many advantages over the company's current truck (not the least of which is that it runs). The new truck would cost $56,295. Because of the increased capacity, reduced maintenance costs, and increased fuel economy, the new truck is expected to generate cost savings of $8,100. At the end of eight years, the company will sell the truck for an estimated $28,200. Traditionally, the company has used a general rule that it should not accept a proposal unless it has a payback period that is less than 50% of the asset's estimated useful life. Pavel Chepelev, a new manager, has suggested that the company should not rely only on the payback approach but should also use the net present value method when evaluating new projects. The company's cost of capital is 8%. Calculate the cash payback period and net present value ofthe proposed investment. (lf the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round cash payback period to 2 decimal place, e.3. 12.51. For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124 and net present value to 0 decimal places, e.g. 5,275.) Click here to view PV table. Cash payback period years Net present value $ Which project should be accepted based on profitability index? should be accepted.Jonczyk Company is considering two different, mutually exclusive capital expenditure proposals. Project A will cost $508,000, has an expected useful life of 14 years and a salvage value of zero, and is expected to increase net annual cash flows by $72,000. Project B will cost $308,000, has an expected useful life of 14 years and a salvage value of zero, and is expected to increase net annual cash ows by $46,000. A discount rate of 9% is appropriate for both projects. Click here to view PV table. Calculate the net present value and protability index of each project. ( if the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round present value answers to 0 decimal places, e.g. 125 and protability index answers to 2 decimal places, e.g. 15.52. For calculation purposes, use 5 decimal places as displayed in the factor table provided, e.g. 1.25124.) Net present value $ $ Protability index Which project should be accepted based on net present value? :1 should be accepted. Frost Company is evaluating the purchase of a rebuilt spot-welding machine to be used in the manufacture of a new product. The machine will cost $173,000, has an estimated useful life of 7 years and a salvage value of zero, and will increase net annual cash ows by $33,229. Click here to view PV table. What is its approximate internal rate of return? (Round answer to 0 decimal places, e.g. 16%.) Internal rate of return % Indicate whether the following statements are true or false: 1. A post-audit is a thorough evaluation of how well a project's actual performance matches the original projections. 2. Postaudits improve future investment proposals. 3. Post-audits are foolproof. 4. In a post-audit, future amounts are revised based on new information. 5. In the post-audit, actual gures are examined. 6. A post-audit cannot use the same evaluation techniques that were used in making the original capital budgeting decisionfor example, the NPV method. 7. A post-audit provides a formal mechanism for deciding whether future projects should be accepted. 4? 4D 1} 4D 4D 4} 4b